In Italy, voters vote for electoral coalitions rather than candidates, and parties are then granted seats according to the percentage of votes they got. The parties then hand out those seats according to a predetermined ranked list of potential parliamentarians.
In many countries, like Israel, that can result in no party getting a majority, which means that unstable coalitions of parties have to be formed and small parties get disproportionate power. But Italy has a provision that if no electoral coalition gets 340 seats, which amounts to a 54 percent majority, the plurality winner is given seats until they have 340. That ensures that there's a majority for the winning coalition, reducing gridlock. That's good news for Bersani and the Democrats, who lead in the polls for the lower house of parliament, the Chamber of Deputies.
But there's a catch. Italy has an upper house of parliament, the Senate. That body is much less democratic than its lower house counterpart (sound familiar?). All former presidents of Italy — a largely ceremonial position, as it is in Germany and Israel — are automatically made senators-for-life with full voting privileges, and presidents can also appoint up to five senators for-life if they so choose.*
But the Italian Senate election system is a mess. Italy's Senate is elected on a regional basis, with each region getting a number of seats to be allocated through coalition voting, a la the national Chamber of Deputies. The winning party in each region gets a majority of the region's seats. But there's no guarantee that any one party will get a majority of the Senate as a whole. And because regionally-based legislative bodies tend to have a rural bias (see, again, the U.S. Senate), Berlusconi is expected to win the Senate.
Because any cabinet has to be approved by both the Senate and the Chamber of Deputies, that causes a problem. The chances of a left-right coalition, in which Berlusconi and Bersani share power, are vanishingly low. The outgoing Prime Minister Monti would be a natural partner for the left, but it appears that his seats and the left's are not enough for a majority in the Senate.
That leaves basically two options. The left could form a coalition with both Monti and Grillo, the populist comedian, in the Senate. That would probably require giving Grillo and some of his allies seats in the Cabinet, which could be a tough sell. Grillo's platform includes left-wing social spending (he wants free Internet for all, free tablets for children, and a 20 hour work week), increased environmental regulation, anti-corruption rhetoric, and middle-class tax cuts. So far, so sympatico with the left-leaning Democratic Party.
But Grillo also wants to suspend interest payments on Italian debt, and to hold a referendum on euro membership. That could antagonize E.U. officials who are trying to pressure Italy to get its debt in order without leaving the currency union. His twin calls for more spending and lower taxes would also make it harder for the Democratic Party to put together an acceptable austerity package; they would likely prefer tax increases to spending cuts, but Grillo opposes both.
He insists that cutting defense spending and government waste can pay for everything, but the Democrats could be forgiven for being skeptical. For context, Italy spent about 1.7 percent of GDP on defense in 2010, or a third of what the United States did as a share of the economy. Meanwhile, its austerity measures in 2012 totaled 3.1 percent of GDP. Even if it totally eliminated its military, Italy couldn't pay for that without cutting other spending or raising taxes, let alone while adding the additional spending Grillo wants.
So let's say the Democratic Party doesn't want to let Grillo into the fold. What then? In the American system of government, there would just be interminable gridlock. But Italy, like most parliamentary systems, has an out. If a government can't get the support of both houses, the president can dissolve them and call new elections. Giorgio Napolitano, the current president, has supported the European Union's interventions in Italy (going so far as to dismiss Berlusconi as prime minister in 2011, basically on German chancellor Angela Merkel's orders). More to the point, he was a member of all of the Democratic Party's predecessor parties, and like Bersani got his start in the Italian Communist Party.** While presidents are generally likely to defer to requests from the leading party to dissolve parliament, Napolitano would likely be especially amenable to such a request from Bersani.
So those are Italy's two possible futures: a shaky coalition with an anti-E.U. comedian, or another election within months of the last one. Europe is doing great, you guys.
* There's some ambiguity as to whether or not this restriction, in the Italian Constitution, means there can't be more than five appointed senators-for-life at any one time, or whether it means that each individual president gets five appointments. Unsurprisingly, past presidents have preferred the latter interpretation, and at times there have been more than five appointed senators-for-life in the Senate at the same time.
** It's worth noting that the Italian Communist Party was perhaps the most moderate Communist party in Europe, breaking from the Soviet Union in the 1970s and transitioning to become a more social democratic ("Eurocommunist" was the term at the time) organization. That said, Napolitano and other leaders of the party were strong supporters of the Soviet Union's crushing of a revolt in Hungary in 1956.